Tom DeMark Charting a 1929 Style Collapse

Famed market timer of the hedge fund stars, Tom DeMark, founder and CEO of DeMark Analytics, LLC, sees the next few days as critical to the survival of the bull market in an interview on CNBC today. DeMark’s chart showing the correlation between today’s S&P 500 versus the Dow Jones Industrial Average in 1929 has been making the rounds and is indeed uncannily eery.

On October 9th, 2013, DeMark said he forecasted a rally of 12.6% to coincide with the rally that occurred one month before the peak in 1929; which also happened to be exactly 12.6%. DeMark said we are currently at the inflection point, similar to 1929, where the stock market unraveled and added, “we think the next two to three days are extremely critical.”

DeMark said if today was an up close and tomorrow the market closes down, followed by a lower opening the next day, “we are probably going to unravel quickly.” DeMark explained further if the market closes down today and opens lower tomorrow, then the market will also unravel and any news on Friday will be perceived as negative.

The interview continued with Demark commenting on the importance of the sequence of days which happens to be 23 and the potential downside which he sees as 40% off the high, or 1,100 on the S&P 500.

How many roads most a man walk down
Before you call him a man ?
How many seas must a white dove sail
Before she sleeps in the sand ?
Yes, how many times must the cannon balls fly
Before they’re forever banned ?
The answer my friend is blowin’ in the wind
The answer is blowin’ in the wind.

This chart being paraded around has been altered to make it look parallel to a time past. It is a fraud and should be ignored. A 100 percent gain in 28 & 29 has been equated to the recent 30 percent advance.

Disclaimer: It is very difficult to outperform a buy and hold strategy. Many investors have found themselves best served over long time horizons by investing regularly in a diversified portfolio of stocks or low cost, broadly diversified indexed stock funds. Information presented is based on analysis of past data and assessments by the Tactical Timing System model. Future performance may not reflect past performance. Profitable trades are not guaranteed. No system or methodology ensures stock market profits. Although accuracy is strived for, no guarantee is made regarding the accuracy of data presented. Nothing presented here should be considered investment advice, but merely the humble opinion of the author.